The consequence of FATCA is that Americans abroad are either renouncing U.S. citizenship or returning to the U.S. This is NOT good for American companies in world markets. Although it makes no sense, the U.S. destruction of U.S. citizenship abroad continues.

It’s all very sad, but the FATCA of the matter is that U.S. citizenship is not compatible with life outside the United States. The article includes:

Ferauge said despite the complications she has not thought about renouncing her U.S. citizenship. She said she will exhaust all options before going that route. She does say it’s been increasingly difficult to remain optimistic about the situation.

“On a last note, to be brutally honest with you, I’m just very tired” she wrote in a recent blog post. “I’m tired of writing letters, tired of explaining and tired of fighting. There is so much about this that I simply cannot change. I cannot make homeland Americans feel differently about their expatriates. My influence — even as a U.S. voter — is practically nil. I have lost all faith in the U.S. government (Obama and company included). I no longer think it will improve – on the contrary I can think of a hundred ways it could get worse. And I have slowly come to the realization that American citizenship and globalization are an imperfect fit these days. Perhaps it will get better with time but that, it seems to me, is something I can hope for my children’s sake, but not something I am coming to believe that I can realistically expect to have for myself.”

Most expatriations are probably motivated primarily by factors such as family and convenience. Many people like Ms. Turner have built a life somewhere else and may not plan to need a U.S. passport.

Complex or costly taxes can help sway a decision but are often only one factor. Although statistics are not available for why people say a final good-bye, many now find America’s global income tax compliance and disclosure laws inconvenient and nettlesome. Some go so far as to say that the U.S. tax and disclosure laws are downright oppressive.

No group is more severely impacted than U.S. persons living abroad. For those living and working in foreign countries, it is almost a given that they must report and pay tax where they live. But they must also continue to file taxes in the U.S. What’s more, U.S. reporting is based on their worldwide income, even though they are paying taxes in the country where they live.

Many can claim a foreign tax credit on their U.S. returns, but it generally does not eliminate all double taxes. These rules have long been in effect, but enforcement was historically less of a concern with expats. Today enforcement fears are palpable.

Moreover, the annual foreign bank account reports known as FBAR forms carry civil and criminal penalties all out of proportion to tax violations. The penalties for failure to file these forms, civil and criminal, are severe. Even civil penalties can quickly consume the balance of an account.

The coup de grace is FATCA, which is ramping up now worldwide. It requires an annual Form 8938 to be filed with income tax returns for foreign assets meeting a threshold. And foreign banks are sufficiently worried about keeping the IRS happy that many simply do not wantAmerican account holders. Americans abroad can be pariahs shunned by banks for daily banking activities.

So, while the media sound bytes tell you that expatriation is all about tax, don’t believe it. Sure, that’s a part of it, but the reality is much more complex.

My own experience with expatriated clients backs this up.

One who had lived in Switzerland for more than 40 years gave up her U.S. citizenship only after all of the banks she dealt with there closed her accounts. They didn’t want to deal with all the reporting requirements the USA requires if they accept U.S. account-holders. It’s easier just to fire their American customers.

Another client received a letter from the bank that had issued a mortgage years earlier for her home in Germany. The letter threatened to cancel her mortgage unless she could prove she was no longer a U.S. citizen. Rather than face a huge balloon payment, she gave up her passport.

A Canadian client contacted me after receiving a bill from the IRS for $20,000, despite being (he thought) 100% compliant with all U.S. tax and reporting obligations. He’d even hired a big-name U.S. accounting firm to prepare his tax returns each year, at a cost of more than $5,000 annually. He never owed any U.S. tax because taxes in Canada are higher than in the USA, but he still got screwed. It appears a Canadian educational savings plan account he’d set up for his daughter was the problem. Under Canadian law, gains in the account are tax-deferred—but not under U.S. law. That led to a big tax bill—and his decision to expatriate.

The fact is, more than 7 million Americans now live abroad. Many of them can no longer hold bank accounts, qualify for a mortgage, or set up a tax-deferred account for retirement or their children’s education.